The FSB Plenary met in Paris to review vulnerabilities in the global financial system and to discuss advances in FinTech. The Plenary also agreed its work programme for 2020.
The Plenary discussed a report which assesses vulnerabilities associated with leveraged loans and collateralised loan obligations (CLOs). The report found that whilst vulnerabilities relating to CLOs have grown since the financial crisis, there have been some mitigating developments. The full report will be published by the end of 2019.
Members talked over the financial stability implications of structural changes in the interest rate environment which have been occurring in recent years. The Plenary also acknowledged the increased resilience of the financial system as a result of recent regulatory reforms. Despite this, members noted that banks in some jurisdictions may still find it difficult to raise capital at reasonable cost in the event of economic shocks.
Members discussed developments in crypto-asset markets, including approving an improved framework for monitoring potential financial stability risks to take account of the rise of so-called ‘global stablecoin’ systems. Alongside this, the FSB is examining supervisory and regulatory issues raised by global stablecoins and intends to publish a consultative report in 2020.
FSB 2020 work programme
The Plenary discussed the FSB’s work programme for 2020, which includes priorities such as:
- tackling new and developing vulnerabilities in the financial system. This will be achieved through further work on how to capitalise on the benefits of financial innovation whilst suppressing risks;
- finalising and operationalising post-crisis reforms; and
- monitoring the introduction and assessing the effects of the reforms.
The FSB’s full work programme for 2020 will be published at the end of the year.